Canadian dividend stocks get underrated at times. The market ignores them when hot growth themes like cannabis, cryptocurrencies, Web 3.0, and, most recently, artificial intelligence (AI) emerge. Most of Canada’s consistent dividend payers aren’t designed to be glamorous. I’ll highlight some notable TSX Dividend Aristocrats that have silently built wealth for their loyal investors through regular dividend payments and quietly multiplied investors’ net worth over the past decades.
Put simply, dividends and consistent dividend reinvestment can change an investor’s financial well-being over a long-term investment horizon. For example, communications giant TELUS (TSX:T) stock generated more than 770% in total returns over the past 20 years, growing a $10,000 investment into $86,300 in two decades. Dividends amplified a 288% share price growth since 2003.
Consistent dividend payments did the heavy lifting to build wealth for TELUS stock investors.
Five Canadian dividend stocks: Proven long-term wealth compounders
It’s not just TELUS that has been a silent but serious wealth compounder for long-term-oriented dividend investors. I will highlight just a few other Canadian dividend stocks that have never skipped a dividend; they keep raising dividend payouts and have generated outsized total returns for investors over time.
See how dividend-adjusted total returns have trounced capital gains over the past 20 years.
| Company | 20 Yr Total Return | Capital Gain Only | Dividend Growth Streak (Years) | Current Yield |
| Canadian Natural Resources (TSX:CNQ) | 2,010% | 1,190% | 22 | 4.4% |
| Canadian National Railway (TSX:CNR) | 1,640% | 1,140% | 27 | 2% |
| TELUS Corp | 766% | 285.9% | 19 | 6.3% |
| Enbridge Corp. (TSX:ENB) | 701% | 244.7% | 27 | 7.7% |
| Fortis Inc. (TSX:FTS) | 690.5% | 278.1% | 49 | 4.2% |
Growing dividends propel Canadian Natural Resources stock
Canadian Natural Resources stock has been a personal favourite dividend stock during the recent oil boom. The company consistently paid dividends through all recent oil cycles, including a period of negative oil prices in 2020. The oil and gas giant intends to distribute 100% of its free cash flow to investors once its net debt reaches $10 billion — a milestone it could achieve early next year.
The energy stock is a wealth compounder of note, given its 2,000% total return since 2003. An oil rally post-COVID-19 propped CNQ stock higher, and the company has raised its quarterly dividend by 167% over the past three years, including this month’s 11% raise to $1 per share, which should yield 4.4% for 2024.
Given its low earnings and cash flow breakeven points, CNQ could sustain a strong dividend-growth spree if oil remains above US$60 a barrel for longer.
Enbridge: A dividend-paying wealth builder for decades
Canadian pipelines behemoth Enbridge is a $98.5 billion wide-moat oil and gas liquids pipelines business and a gas utilities operation that may exponentially grow once a $19 billion acquisition of U.S. gas utilities closes in 2024. Enbridge stock has consistently paid dividends since 1956 and religiously raised payouts every year for 28 consecutive years — a tradition that’s likely to persist for longer.
The company boasts a diversified, low-risk pipeline and utility-like cash flow. It sustainably grew its distributable cash flow per share throughout the Great Recession of 2008-9, a commodity price collapse midway through the 2010s, environmental catastrophes (Alberta fires), and unprecedented times during the COVID-19 pandemic.
Investors who bought Enbridge stock 20 years ago could be sitting on a 700% total gain today. With dividend reinvestment, a $10,000 invested in ENB stock two decades ago could have grown to about $80,000 today. Dividends were responsible for about 65% of total returns on Enbridge stock during the period.
Can Enbridge stock continue to enrich shareholders?
Investors concerned about higher financing costs following interest rate hikes of 2022 may be calmed by the knowledge that Enbridge has proactively managed its balance sheet very well. Management estimates that only 10% of Enbridge’s interest expense is subject to floating interest rates in 2024. Rising financing costs aren’t of immediate concern.
Most noteworthy, Enbridge is busy growing its gas storage and distribution business in North America while establishing a renewable energy business on the side. The company’s growing cash flow from operations could cater to higher interest costs and dividend growth well into the future.
The current quarterly dividend on Enbridge stock should yield 7.7% annually for investors who acquire shares at prices under $47 a share at the time of writing.
